Correlation Between Franklin FTSE and SSgA SPDR

Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and SSgA SPDR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin FTSE and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin FTSE Brazil and SSgA SPDR ETFs, you can compare the effects of market volatilities on Franklin FTSE and SSgA SPDR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin FTSE with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and SSgA SPDR.

Diversification Opportunities for Franklin FTSE and SSgA SPDR

-0.78

Correlation Coefficient

Franklin FTSE  SSgA SPDR

Pay attention - limited upside

The 3 months correlation between Franklin and SSgA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Brazil and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Franklin FTSE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin FTSE Brazil are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and SSgA SPDR go up and down completely randomly.

Pair Corralation between Franklin FTSE and SSgA SPDR

Assuming the 90 days trading horizon Franklin FTSE Brazil is expected to under-perform the SSgA SPDR. In addition to that, Franklin FTSE is 2.73 times more volatile than SSgA SPDR ETFs. It trades about -0.28 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.16 per unit of volatility. If you would invest  18,634  in SSgA SPDR ETFs on September 21, 2024 and sell it today you would earn a total of  414.00  from holding SSgA SPDR ETFs or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Franklin FTSE Brazil  vs.  SSgA SPDR ETFs

Franklin FTSE Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin FTSE Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

SSgA SPDR ETFs

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SSgA SPDR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Franklin FTSE and SSgA SPDR

The main advantage of trading using opposite Franklin FTSE and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, SSgA SPDR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.

The idea behind Franklin FTSE Brazil and SSgA SPDR ETFs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..